If I Have a Mortgage, Are My Savings with The Same Bank Guaranteed?

Lplasmog on 21/08/2023 - 11:29

I have a $1m fixed rate loan with a bank.

I am accruing savings in a savings account.

Normally I would not save more than $250k with one bank, to be protected by the government bank guarantee.

However, I am thinking the government guarantee is not necessary if I save in the same bank that has my mortgage, as if they go bust, any savings I have will effectively be offset against the loan. Therefore I could save $400k in the same bank, and on the odd chance they go bust, well I owe them more than they owe me anyway.

Is this a safe thing to do?

Financial Home Loan Loan

Comments

  • Gdsamp on 21/08/2023 - 11:39
    -2

    Honestly

    If you're with one of the Big Four do you really think they're going to go bust?
    If the four banks that make up 25% of the ASX go tits up you've got bigger problems than your savings

    • plasmog on 21/08/2023 - 11:40

      I am with a small credit union.

      • Gdsamp on 21/08/2023 - 11:43
        +4

        understandable

        have a read of these:

        https://www.apra.gov.au/frequently-asked-questions-about-ban…

        If I have a deposit account as well as a loan with my bank, building society or credit union, will the deposits be set off against the loan under the FCS?

        No. Under the FCS, the account holder will receive the benefit of the FCS coverage up to $250,000 on their deposit account(s). However, the account holder will still be liable for the loan (and the repayments) and will likely receive instructions in relation to any loans from the statutory manager or liquidator that is appointed at the time of the FCS.

        If it helps you sleep at night then park the savings at another bank.

        • plasmog on 21/08/2023 - 12:50

          Thank you, this has directly answered the question, appreciate it.

  • Ozbar Gain on 21/08/2023 - 11:39
    -1

    Why is the savings not in an offset?

    • plasmog on 21/08/2023 - 11:40

      It is a fixed loan. a) It doesn't offer an offset, b) If it did, due to interest rate changes since I opened my fixed rate loan I would be earning more in the savings account.

      • Brick50 on 21/08/2023 - 12:11

        Keep in mind you also have to pay tax on any interest you make

        • plasmog on 21/08/2023 - 12:50
          +2

          My fixed loan is at 2.1%, my savings are earning 5.5%.

  • trapper on 21/08/2023 - 11:42
    +3

    I wouldn't expect your savings to get any kind of priority over anyone else's saving just because you also have a loan with the same bank.

    If the bank were to go bust the loans would be transferred to other banks, and the resulting funds would be combined into a common pool for distribution.

  • Duckie2hh on 21/08/2023 - 12:09
    -1

    as if they go bust, any savings I have will effectively be offset against the loan

    This is incorrect. As an example, you have $500K in savings and mortgage of $1 million. If the bank goes bust, the ADI government guarantee will only cover you for $250K.

  • plasmog on 21/08/2023 - 12:49

    Hi, my question is not about whether the ADI will cover me, I am wondering if I will be in the clear despite the ADI, because of my net position with the bank.

    • Ozbar Gain on 21/08/2023 - 12:51
      +1

      No you wont

    • Duckie2hh on 21/08/2023 - 13:06

      My answer covers that. You will not be in the clear.

  • randomusername2017 on 21/08/2023 - 12:50

    Are you rich yet?

    If the bank goes under you'll lose your deposit and the mortgage debt will still be attached to title…. guess how the receivers will recover the debt

  • plasmog on 21/08/2023 - 12:51

    getting there

    • randomusername2017 on 21/08/2023 - 12:53
      -1

      Still just trolling along aye…

    • BLAIL on 21/08/2023 - 13:10
      +1

      Didn't think you'd be on a fixed loan at 2.1% still, when did you go on it and was it like a 5 year locked in sort of deal?

      • Puglife on 21/08/2023 - 14:06
        +1

        A lot of people are still on 2%. Most run out in the next 6 months.
        I have 4 months left.
        A lot of people believed they wouldn't go up till about now based on the info about 3 years ago so they fixed the loan till late 2023/ early 2024
        Scary to think what will happen in the next 6 months, I expect many people will sell.

      • plasmog on 21/08/2023 - 14:30

        late 21, 4 year fixed, wish I did 5 (but would be on a slightly higher rate).

  • plasmog on 21/08/2023 - 13:12

    late 21, 4 year fixed, wish I did 5

    • John Kimble on 21/08/2023 - 13:49
      +1

      I could have fixed at 1.99% in Jan 2020 for 4 years but I didn't…🤦😭

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